The Administration supports the goal of H.R. 416, which is to establish
procedures for Federal agencies to provide an equitable remedy for
employees who were mistakenly placed in the wrong retirement system during
the transition from the Civil Service Retirement System (CSRS) to the
Federal Employees' Retirement System (FERS). The Administration, however,
strongly opposes the bill as reported by the House Government Reform and
Ways and Means Committees. In particular, the bill is problematic for the
following reasons:

H.R. 416 would be unnecessarily costly. Implementation of the
bill would cost Federal agencies roughly $500 million over the next five
years, reducing funds available for other discretionary spending
priorities. These unnecessary costs would result in large part from the
bill's overcompensating potentially thousands of affected Federal employees
by giving them "missed" employee contributions to the Thrift Savings Plan
-- which rightly would have been each employee's responsibility had the
error never occurred -- in addition to missed Federal Government retirement
contributions and associated lost earnings required by current law.

H.R. 416 would be difficult to administer and is incomplete.
The bill's provisions designed to correct the errors are excessively
complex, thereby potentially leading to further errors by the more than one
hundred Federal agencies responsible for implementation. In addition, the
bill inadequately addresses errors associated with former employees,
retirees, and deceased retirees. The Administration believes that
additional legislation would be required to address these errors.
Furthermore, the bill itself requires submission of additional legislation
related to certain coverage error situations.

The Administration looks forward to working with the Congress to enact a
mutually acceptable solution to this problem that is consistent with the
Administration's proposal, the "Retirement Coverage Error Correction Act,"
which was transmitted to the Congress on March 4, 1999.

Pay-As-You-Go Scoring

H.R. 416 would affect direct spending and receipts; therefore, it is
subject to the pay-as-you-go (PAYGO) requirement of the Omnibus Budget
Reconciliation Act of 1990. OMB's preliminary PAYGO estimate indicates
that H.R. 416 would increase direct spending by approximately $2 million
over the period FYs 1999-2004. (However, as noted above, it would
substantially increase Federal agencies? discretionary spending on
personnel, which would reduce funds available for other priorities.)